Hanjin Shipping puts its Asia-U.S. route assets on sale

Hanjin Shipping puts its Asia-U.S. route assets on sale. October. 15, 2016 07:22. by 이은택 기자nabi@donga.com.

The Seoul Central District Court announced on Friday that Hanjin Shipping will sell its Asia-U.S. route assets, the main cash cow for Hanjin Shipping. Industry insiders are closely monitoring on whether Hyundai Merchant Marine (HMM) will participate in the bid, or a global large shipping company will take the route.

As the legal owner of the troubled company, the Seoul Central District Court announced its plan to sell Hanjin Shipping's Asia-U.S. route logistics system, seven overseas subsidiaries, five container ships, and workforce in charge of routes.

As the cash cow that earned Hanjin Shipping 3 trillion won to 4 trillion won every year, the Asia-U.S. route placed the financially stricken company the world's sixth largest carrier with 7 percent of market share in this route.

Meanwhile, HMM is taking a cautious step towards participating in the tender for the Asia-U.S. route. "We will decide whether or not to participate in the tender only after we come up with a clear analysis of return on investment," an official of HMM said. "Consignors won't just automatically follow the next owner of the route and ships," an industry expert said. "This will be a major issue for the cash-strapped HMM."

However, the route may fall into the hands of global players such as Danish Maersk or Swiss MSC. Taking up 28 percent of the world shipping market, the two giants are highly likely to join the competition, as they were slightly less competitive in the Asia-U.S. route previously owned by Hanjin Shipping.

"If this core route is sold overseas, it may lead to a long-term national loss," shipping expert said. "Korean exporters may face higher logistics cost."

Letter of intent (LoI) will be received until 3 p.m. on Oct. 28, and preliminary inspection will be made by bidders who submitted their LoIs from Oct. 31 to Nov. 4. The bid is expected to open on Nov. 7, and the contracts will be prepared within mid-November. It is known that the court intends to secure as much as cash as possible through the selling to write off Hanjin Shipping's debt and solve the logistics crisis.